6 Common Crypto Scams to AVOID in 2022

With cryptocurrency being more popular than ever before, crypto scams are rapidly making their way into every corner of the crypto world. As with anything with money involved, scammers are always preying on their next target in the world of crypto. It has gotten to the point where billions of dollars worth of crypto are stolen from victims every single year, and this not only results in heavy losses, but it also ruins the reputation of cryptocurrencies. In this article, I’ll be taking a look at some of the most common crypto scams, how you can identify them, and how you can avoid them.

Pump and Dump Scams

Pump and dump scams are one of the most common — yet one of the hardest — crypto scams in the world. Now, pumping and dumping have been around for a long time in the world of stock markets. Basically, it’s when an investor buys a significant amount of a certain stock or, in this case, a cryptocurrency, at a massively discounted price. The investor is able to get the discount because it’s generally considered a good investment. However, shortly after purchasing the discounted stock, the investor will heavily promote it in every outlet possible in very misleading ways. As soon as enough clueless people invest their own money into the asset, the initial investor will simply dump most of their investment, causing them to earn a profit and the “victims” to take a massive loss.

Even though these schemes have been outlawed in the stock market for a while now, they’re generally considered close to non-existent. In the crypto world, they’re extremely common. A lot of scammers will buy small market cap tokens at insanely low rates. I’m talking a fraction of a cent. They will then heavily promote that token on all sorts of social media, and even if they have a following of just a few thousand people, it can cause a small market cap token’s price to increase by massive percentages. Eventually, though, the scammer will dump their initial investment, and most investors will face heavy losses. Always do the right amount of research before investing in small-cap tokens.

Crypto Rug Pulls

Rug pulls are related to pump and dump schemes in a lot of different ways. The premise of both of these is quite similar, but in this case, it’s the developers of the cryptocurrency that are doing the scamming part. The developers will create a cryptocurrency with the sole intent of buying massive amounts of it before it’s listed on any public crypto exchange. In most cases, these developers will own the vast majority of the crypto. After this, they will follow the usual pump and dump strategy of heavily promoting the crypto using any outlet they can, and once enough people invest, the developers will simply sell all of the cryptos they have.

Rug pulls are a lot more extreme than regular pump and dump schemes. A rug pull can cause the price of crypto to crash by more than 99%. The losses are generally much higher, even though both are scams. On top of that, some rug pulls are suspiciously coded in a way that victims who invested in the crypto are not able to sell it at all to another person. This is considered a “hard” rug pull. Regardless, rug pulls are extremely common in the crypto world, and one way you can avoid them is by making sure you only invest in crypto projects that have been independently audited by a reliable third party.

Phishing

Phishing scams are common all over the internet for various different things, but in crypto, they can be extremely convincing. The way phishing scams work is that you’ve sent an e-mail or text message containing a link to a website you frequently visit. Generally, the e-mail will say you urgently need to log in because someone is trying to hack your account. The email is always different, but the main thing they all have is that they’ll all ask you to log into something.

For example, you might’ve received an email from Coinbase asking you to log in for security verification. The link that will be provided in the email will look like it’s from the real Coinbase website. When you click on it, it’ll look exactly like the Coinbase website down to the last detail. However, it’s not. It’s a fake website that’s meant to fool you into thinking it’s the original one. Once you enter your log-in credentials, the hackers will be able to see whatever you’ve entered, and in turn, they will hack into your real Coinbase account.

Usually, these phishing websites might have tiny differences in the URL that are easy to miss. For example, instead of linkedin.com with a small “L”, it could be Iinkedin.com with a capital “I”. The scammers can be a lot more clever than you’d think, which is why you should always double-check the URL before you enter any sensitive information.

Fake Technical Support

This is a relatively recent concept in crypto, but tech support scams are almost infamous at this point. In reality, most people don’t really fall for fake tech support scams, but you should still know more about them. If you ever receive a pop-up message or anything similar that says there’s an error of sorts and the only way to fix it is to call a certain number, don’t call it. In most cases, it’ll just redirect you to a call center in another country, and the scammer will try to get any kind of detail they can out of you during that call. In most cases, they’ll just end up wasting your time, and in the world of crypto, time is money!

As for tech support scams in crypto, scammers will often pretend to be employees of various crypto exchanges. In some cases, they’ve managed to get their hands on people’s wallets, Coinbase accounts, Binance accounts, and much more. They might also call you before you call them, so you should never believe someone at face value whenever they say they’re calling from whatever crypto exchange you use.

False Claims

Whenever you stumble across the website of a brand new crypto project, you might think of it as the most reliable thing ever. The website might mention that this cryptocurrency has been audited by reliable third parties, it already has a lot of investors, partners, followers, and all kinds of other things. But once you take a closer look into each of these projects, you’ll notice that the “audits” are done by shady companies that’ll just say your crypto is fine as long as you pay them. In many cases, there might not even be an audit. The “investors” might all be a bunch of stock images next to a vague description of who that person is. The followers might all be bot accounts with no actual engagement. The point is, that every single cryptocurrency makes all kinds of different claims, however, not all of them are always true.

You’d be surprised at how few people actually verify the claims of each crypto project. In many cases, seeing something written on a website is “proof enough”. However, you should remember to always verify some of the claims cryptos are making yourself. In some cases, the claims may be misleading, but in other cases, they’re outright suspicious.

Crypto Influencer Scams

Influencers and cryptocurrencies are both 21-century phenomena, so it would make sense for both to go together like bread and butter, right? Well, sometimes. Influencers have been used as tools for brands to promote their own products from the very beginning, and now, influencers are being used to promote certain crypto projects as well. But here’s the thing, a large percentage of crypto projects that influencers are promoting these days are all pump and dump or rug pull scams. In some cases, the influencers themselves might not even know that it’s a scam, they’re just looking for a paycheck for their Instagram post.

Even some respectable influencers have been caught promoting scam cryptos in the past. It’s important that you don’t treat influencers as if they can do no wrong. If you’re interested in a project that’s being promoted by an influencer, make sure you do a lot of research before you actually invest in it. You can’t just take someone’s word for it, especially if they’re making money off of the whole ordeal.

Conclusion

Overall, there are a lot of different ways you can get scammed with cryptocurrency, and even the smartest of us could fall for one of these. I did too. Learned my lesson and I think I may again fall into the trap if I don’t pay attention. It’s important to note, that these scams aren’t a result of cryptocurrencies. Almost all of these scams have existed since before cryptocurrencies even existed, and whenever there’s going to be money involved in anything, scammers are unavoidable.

That’s why you should always have a clear head and think smart before you invest in any kind of crypto project. In most cases, crypto projects are not scams, and the only way for you to know what those projects are is by doing research, reading reviews, verifying claims, and not blindly trusting everyone’s recommendations.

What’s a crypto scam that I missed? Let me know in the comments below! Subscribe to my YouTube channel for more information like this https://bit.ly/3720zFW